Articles for Media

Pandora Crosses 125 Million Registered Users, Stock Still Expensive

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Wednesday, February 1st, 2012 by

A little over two weeks back Pandora Media (NYSE:P) announced that it crossed 125 million registered users, which gave the stock a boost. Overall this year, the company’s stock has gained more than 30% but still stands below its IPO price. Our user estimates for 2011 stood at 123 million, which we’ll update as soon as the company releases its Q4 2011 earnings this month. While 123 million is just 1.6% below the actual 125 million figure, our $9.48 price estimate for Pandora is at about 30% below its market price. We believe that Pandora is still overpriced based on fundamentals even with the current user growth trend. Pandora competes with Clear Channel Radio, Spotify which has expanded via Facebook (FBOOK) and Sirius XM (NASDAQ:SIRI).

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Netflix Can Hit $180 if its International Subscriber Base Reaches its US Size

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Wednesday, February 1st, 2012 by

After a disappointing 2011, Netflix (NASDAQ:NFLX) has had a fantastic start to 2012 with stock up nearly 70%. Half of this gain came after the company recently released its Q4 2011 results. As the company returned to growth in terms of net unique subscribers, it showed that it has recovered from the temporary slump of later half of 2011. The decline in DVD subscribers is being more than compensated by gain in streaming subscribers. The natural question that arises is – how high can Netflix’s stock go now? Below we present an optimistic scenario to understand this potential. Netflix competes with video rental companies such as Dish Network’s (NASDAQ:DISH) Blockbuster, Hulu and Amazon (NASDAQ:DISH) in the U.S. In international markets such as U.K, it competes with BskyB and Lovefilm.

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Sirius Gains on Stronger U.S. Auto Sales & Used Car Push

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Tuesday, January 31st, 2012 by

With light vehicle sales in the U.S. jumping in January, the satellite radio service provider Sirius XM (NASDAQ:SIRI) may perhaps anticipate another good year. While it’s too early to say, the continued growth in automotive sales in the U.S. could boost the company’s stock in 2012. Sirius XM’s growth is primarily hinged on sales of new vehicles from companies such as GM (NYSE:GM) and Ford (NYSE:F), although the channel of pre-owned vehicles is becoming increasingly important. Light vehicles sales are estimated to have grown by 6% in January 2012 compared to same period a year ago.

Our price estimate for Sirius XM stands at $2.18, implying a premium of about 5% to the current market price.

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Netflix Shows Recovery in Streaming Business, Fair Value $133

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Friday, January 27th, 2012 by

Netflix (NASDAQ:NFLX) recently released its Q4 and full year 2011 results. As the company returned to growth in terms of net unique subscribers, the stock jumped significantly. We have raised our fair value for Netflix to $133, which now stands at a premium of about 15% to the market price. The earnings highlighted a couple of things – Netflix is back on growth track and DVD subscribers continue to decline substantially. A little confusing? The point is that customers are not leaving Netflix as much as before and a substantial decline is coming from subscribers dropping hybrid service and moving to streaming only. Netflix’s competitive advantage over other video rental companies such as Dish Network’s (NASDAQ:DISH) Blockbuster, Hulu and Amazon (NASDAQ:DISH) still remains.

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Netflix’s Plans to Beef up Original Content is an Expensive Bet

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Friday, January 27th, 2012 by

Netflix’s (NASDAQ:NFLX) stock jumped as the company’s Q4 2011 results showed net subscriber losses reverting back to net growth. During the result announcement, management shed some light on its broader strategy including plans to as a pure-play subscription and not offering à la cart services, spending less on DVD marketing and continuing to invest more in original programming for its streaming services. The latter part of its strategy is somewhat influenced by Time Warner’s (NYSE:TWX) premium movie channel HBO, which spends about 40% of its budget on original programming. While this will give Netflix a further edge over competitors such as Blockbuster, Hulu and Amazon (NASDAQ:DISH), it may also imply some hardship ahead.

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Viacom Earnings Preview: What We Are Watching

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Thursday, January 26th, 2012 by

Viacom (NASDAQ:VIA) began the new year by announcing that its filmed entertainment division Paramount Pictures was the 2011 leader in terms of worldwide box office sales. The studio generated global revenue of about $5.2 billion with about 38% coming from the U.S. box office. Traditionally filmed entertainment has been a small portion of Viacom’s value, about 15% according to Trefis estimates, compared to the cable networks on which the company primarily relies. However if Paramount is able to continue capturing market share the movie business could become more important. The company is reporting its Q4 and full year 2011 earnings on February 2nd, at which time we will update our analysis. Viacom competes with other media companies such as Time Warner (NYSE:TWX), Disney (NYSE:DIS) and News Corp. (NASDAQ:NWS).

Our price estimate for Viacom stands at $64, a premium of about 20% to the market price. Read More »

Netflix Earnings Should Confirm Recovery, $126 Fair Value

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Thursday, January 19th, 2012 by

Netflix (NASDAQ:NFLX) is going to announce its Q4 and full year 2011 results on Wednesday, January 25. As always, the earnings announcement is eagerly awaited given how the later half of 2011 has fared for Netflix. The stock has done well in the new year, and it will be interesting to see whether the trend continues after the earnings announcement. Netflix reported net subscriber losses in Q3 2011 and, whether that has continued or not in Q4, is going to be a major aspect to watch out for. It will be interesting to see how competitors such as Amazon (NASDAQ:NFLX), Dish Network’s (NASDAQ:DISH) Blockbuster and DVD rental company Redbox have affected Netflix’s Q4 subscriber growth.

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Time Warner Updates: Weak DVD Sales Drag on Robust Outlook

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Wednesday, January 18th, 2012 by

Time Warner (NYSE:TWX) recently announced that it witnessed a weak Q4 of 2011 in terms of its home entertainment business which primarily consists of DVDs and Blu-Rays. The decline in DVD sales has been a primary culprit for a weak quarter and resulted from the consumer shift to Internet streaming as well as the growth of DVD and streaming rental companies such as Netflix (NASDAQ:NFLX) and Blockbuster, now owned by Dish Network (NASDAQ:DISH). As a result of the observed trends, Time Warner recently took some steps to address the situation.

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Home Video Market Data Show That Convenience and Price Are Key to a Winning Strategy

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Tuesday, January 17th, 2012 by

While the overall home video market in the U.S. fell in 2011, certain trends emerged that demonstrate that it is not just the form – be it physical or electronic – that matters, but the convenience and price points also play a very critical role in determining how the home video business grows. Nevertheless the fall in DVD sales is a reason to worry for media companies like Time Warner (NYSE:TWX), Viacom (NASDAQ:VIA) and Disney (NYSE:DIS). For this reason, these companies are striking more online content licensing deals. Time Warner has even decided to increase the DVD sell-through window to 56 days, double the earlier period. Let’s take a quick look at 2011 home video market growth and what it means.

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Dish Digs in Heels on DVD Rental Window, Shows Confidence in Strategy

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Tuesday, January 17th, 2012 by

Dish Network (NASDAQ:DISH) acquired Blockbuster in 2011 when the latter filed for bankruptcy. The idea was to tap into lucrative video rental market, which is currently dominated by Netflix (NASDAQ:NFLX), as well as to enhance its overall service to stop subscriber losses. Q4 2011 results are likely to showcase the extent to which this strategy has been successful. While we don’t have a strong view on subscriber trends given the volatility in Dish’s subscriber performance, we believe that Dish is committed to improving the service for its subscriber that ultimately helps build engagement and attract users. After a series of disputes with content owners over their demand for increase in carriage fee, Dish’s refusal to double the 28-day DVD rental window for Warner Brother’s DVDs is the latest example. Warner Brothers movie studio is owned by media company Time Warner (NYSE:TWX)

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